Blended Pricing and Product Mixes

Blended Pricing and Product Mixes

THE ISSUE:

A vendor may offer the “best of both worlds” and offer hospitals a mix of new and reprocessed devices at a blended price – or allegedly a price lower than buying all new but slightly higher than all reprocessed.

Examples of this include:

An EP manufacturer promising hospitals that they will provide new and reprocessed devices in a 1:3 ratio – but ending up providing a lot less reprocessed than this;

An EP manufacturer offering up clearances for reprocessed devices that they end up only making available in the least popular sizes and models; and

Major trocar manufacturer offering blended boxes of new and reprocessed trocars, but not providing accountability on the actual number of reprocessed items (versus new) and not maximizing the reprocessing potential.

AMDR urges hospitals to:

Ask if the vendor will be transparent in accounting how many new and how many reprocessed devices they are providing;

Demonstrate how spent SUDs will be disposed of. What are the environmental costs of such disposal?

Evaluate if the contract requires the hospital to a minimum purchase amount. If so, are those amounts realistic? And

If after evaluating these elements, consider if the cost is truly a fair blend, or if the hospital would do better working with both the OEM and a-third-party reprocessing vendor to maximize the overall value of the OEM provided devices.

SUCCESSFUL WORK AROUNDS:

AMDR members report that this tactic can be successfully countered by:

Asking for and receiving ongoing reporting of the use of reprocessed versus new devices;

Ensuring better device utilization by maximizing the purchase and use of reprocessed products first, then buying more new;

Threatening to do business with another vendor which does not place limitations on how many devices they can buy or reprocess; and